Whether you are a home buyer or purchasing property for investment purposes, choosing the right mortgage can be a life changing decision so it is important you get a home loan that best suits your needs.
Finance Detective will assist you during every step of the process. We help you acquire the required documentation needed and provide cost savings where available. Buying a home should be an enjoyable time so don’t get stressed, let an expert handle it for you.
The Loan Process
Things to consider:
How much to borrow?
When it comes to your home loan, working out how much to borrow is a very important step. You do not want to take the risk of under borrowing and limiting yourself as to what you are able to purchase. On top of this, over borrowing will lead to a higher interest rate and a higher repayment amount. When working out how much to borrow, there is one simple rule to follow, which is your total repayment should be no more than 30 percent of your total income. Also make sure that you leave a buffer of round two percent to protect yourself in the event of an interest rate increase.
Purpose of the loan?
The first step is to decide the reasons why you require the loan. Your motivation for acquiring the mortgage will affect your overall decision. Ask yourself the question, Do you require the loan to:
- Live in the property? This is for anyone including first homebuyers that are going to reside in the property they wish to purchase.
- Purchase an investment property? If you plan on purchasing an investment property to rent out or renovate to sell, you may need to apply for an investment loan.
- Line of credit? A line of credit allows you to access the equity in your home and use that money as you chose, whether that is for a holiday or home renovations etc.
- Reverse mortgage? If you’re over 60 years old, a reverse mortgage may interest you. If you own your home, this type of loan enables you to borrow money against the equity in your home and use, as you wish.
Type of Loan?
What type of loan will suit your needs? This is the big question that most borrowers face when deciding on their home loan, the question is whether to choose a fixed or variable interest rate. Click below for a list of the advantages and disadvantages for both options.
Features of a loan?
The next step in the home loan process is to determine the types of features and services you need from a mortgage. There are many choices when it comes to the features of a home loan, Finance Detective will go through all of the advantages and disadvantages of each option. What you need to consider is which of the following would be to best suited for your needs:
- Redraw facility
- Additional repayments
- Lump sum repayments
- Mortgage offset
- Combination loan